In addition to DiB’s LBM inventory, says Heine, pro dealer members can benefit from the co-op’s industrial/ commercial program, which aims to assist them in product and material sourcing for an increasing number of builder and contractor customers diversifying into multifamily and non-residential projects.
Cyr also credits DiB with pioneering a service and companion software program for the lumber and hardware sector that studies the feasibility and helps determine the profit potential for a range of ventures a dealer might undertake. “It helps a dealer grow smarter,” says Cyr. “If you want to move to a better location or carry a new product line, it’ll tell you if it makes sense.”
Ace Hardware, meanwhile, aids member profit potential, at least in part, with up to $215,000 in capital funding for new and multiple store locations, provided the store owner adheres to the co-op’s trademarked Vision21 standards for store layout and merchandising, inventory, pricing strategy, employee training, and customer loyalty and other promotional programs. “We try to make it as turnkey as possible for new and existing investors,” says Venhuizen.
Both of the industry’s leading co-ops are also providing dealer-members with another, historically difficult, profit center: online sales. Through their respective Web sites, either linked to or from (or perhaps designed into) their members’ sites, pros and consumers can purchase from the 65,000-plus SKUs that Ace and Do it Best each offer. Purchased items can be shipped to the nearest or most convenient store location for pickup, or delivered directly to a doorstep or jobsite. Regardless, the store owner gets the profit off the sale and also benefits from a seamless back-office accounting program that automates the transaction.
And finally, as if the standard buying power that co-op and buying group members enjoy wasn’t enough, periodic buying shows hosted by co-ops and buying groups enable dealers to meet directly with the vendor network to negotiate even sweeter deals. “We concentrate our purchasing at those shows to take advantage of the discounts offered there,” says Hutchings.
As lumber and hardware co-ops (and, to a lesser extent, the more fragmented culture of buying groups formed by smaller numbers of dealers to achieve volume discounts for commodity products) continue to expand, pro dealers can expect such groups to dangle even more carrots in front of them. “For us to grow, we need our members to grow,” Heine says. “We make sure all of our programs ensure that growth.” —Rich Binsacca is a contributing editor for PROSALES.
Sidebar: What Is a Cooperative? Though operating as for-profit businesses, cooperatives are different from other business models in that they are owned and governed by member companies. In addition to leveraging benefits of collective bargaining and purchasing, access to a wider range of products and services, and other economies of scale, co-op members share any profits generated by the cooperative. Co-ops include producer-owned, consumer-owned, and worker-owned models, all of which promote the benefits of collective sales, marketing, and purchasing power. For more information, contact the National Cooperative Business Association, (202.638.6222); or the National Cooperative Bank,, (800.955.9622).
Sidebar: Buying In Considering a co-op or a buying group? Add the following info to your evaluation process:
